Japan 2013 – 2014

Exit polls show big win for Japan’s AbeRuling coalition keeps two-thirds majority in vote dubbed referendum on prime minister’s strategy for reviving economy.
The polls show the coalition – Abe’s Liberal Democratic Party (LDP) and its junior partner Komeito – winning a two-thirds majority in the 475-seat lower house, but with the LDP falling short of such a “super-majority” on its own.
Abe, 60, called the election two years early in order to obtain a fresh mandate for his “Abenomics” strategy of hyper-easy monetary policy, fiscal stimulus and structural reforms after his decision to put off an unpopular sales tax rise next year for fear it would derail a recovery already in doubt.
23 AprilNote Thanks to the creator of the map below, Daniel FeherAnalysis: Dr John Swenson-Wright, Chatham House
In foreign policy, Japan’s immediate neighbours, most notably South Korea and China, worry that the prime minister may be planning to pursue an aggressively nationalist agenda, encompassing wartime historical revisionism, the abandonment of Article 9 (the so-called “peace clause” of Japan’s constitution), and a more belligerent defence of Japan’s territorial interests in the East China Sea and the Sea of Japan.
The reality is likely to be more prosaic and less dramatic.
Abe’s public rhetoric over contentious wartime issues can at times be insensitive and diplomatically ill-judged, and there is no mistaking the prime minister’s personal desire to promote constitutional revision.
However, Japan’s public remains largely evenly divided about the merits of re-visiting such contentious subjects and, notwithstanding the LDP’s rising political fortunes, the government still lacks the necessary two-thirds majority in the Upper House to effect constitutional revision.Japan Seeks Foreign Workers, Uneasily
(IPS) – Desperate for more workers to support a construction boom, Japan has proposed to expand its controversial foreign trainee programme to permit more unskilled labour from Asia to work in Japanese companies for five years from the current three years.
The internship plan launched in 1993 invites foreign trainees to work in Japanese companies under the slogan of learning new technologies before returning home.
More than 200 companies were reported in 2012 for abuses such as low pay and long working hours for foreign workers. Activists view the trainee system as a blatant stop-gap measure to counter Japan’s aging population – a quarter of its 130 million people are above 65. From a peak of 83 million workers in 1995, their number had fallen by almost five million in 2012.
The construction industry badly needs foreigners for jobs such as plasterers and mold makers.
The government has now proposed a plan for trainees to extend their visas by two years for “designated activities” to pave the way for employment for trainees.
Labour activists say the move is suspiciously timed for Japan to host Olympics 2020, and that it will do little for the stated policy of the trainee system to exchange technology with developing countries.
14 JanuaryAbe Set to Focus on Economy at Davos
(WSJ) Prime Minister Shinzo Abe’s upcoming keynote address at the World Economic Forum in Davos, the first by a Japanese premier, gives him a welcome opportunity to refocus attention on his economic message. … when Mr. Abe follows in the footsteps of world leaders past and present including David Cameron, Nicolas Sarkozy, and Vladimir Putin in kicking off proceedings with the keynote address, he will likely use the forum to reassure foreign investors that the economy is foremost in his mind rather than his hawkish politics.
6 JanuaryPrime Minister of Japan Shinzo Abe: Japan’s Coming “Wage Surprise”
(Project Syndicate) The year 2013 saw the Japanese economy turn the corner on two decades of stagnation. And the future will become even brighter with the appearance of what we are calling the “wage surprise.”
Intensive discussions since September among Japanese government, business, and labor leaders have been geared toward setting in motion an upward, virtuous cycle whereby increased wages lead to more robust growth. I have taken part in two of the four meetings so far, joining our finance minister, economy minister, and labor minister, as well as industry and labor leaders like Akio Toyoda, the head of Toyota Motors, and Nobuaki Koga, who leads the Japanese Trade Union Confederation. Each time, I have come away from the meeting feeling confident and invigorated.
Let’s face it. Deflationary pressure in Japan – and only in Japan – has persisted for well over a decade. At the beginning of my premiership, I launched what observers have called “Abenomics,” because only in my country had the nominal wage level remained in negative territory for a staggering length of time.

2013

30 DecemberWhy Chinese-Japanese Economic Relations Are Improving
Delinking Trade From Politics
(Foreign Affairs) When it comes to Japan, China seems torn. On security issues, it is becoming increasingly hawkish — witness its recent declaration of an Air Defense Identification Zone (ADIZ) over the Senkaku (Diaoyu) Islands in the East China Sea. But on economic ties — from Japanese imports to Japanese investments — it is becoming increasingly dovish. In short, China has started to delink economics from politics.
This represents a big reversal from last year, when the Middle Kingdom believed that it could use Japan’s dependence on the Chinese market to wrest territorial concessions from Japan. In the summer and fall of 2012, riots and boycotts of Japanese products — some of them encouraged by the Chinese government — spread across China after Yoshihiko Noda, who was then Japan’s prime minister, bought from their private Japanese owner some of the Senkaku (Diaoyu) Islands, which are controlled by Japan but also claimed by China.
A sign that China has given up on that gambit was seen in Chinese media reporting on the visit of a top-level Japanese business delegation to Beijing in November. China’s state-owned TV network, CCTV, reported, “Putting aside their countries’ diplomatic deadlock, the two sides are seeking better economic ties.” To be sure, the normalization of economic ties could be interrupted by Japanese Prime Minister Shinzo Abe’s widely criticized December 26 visit to the Yasukuni Shrine, which is controversial because it honors, among others, 14 Class-A World War II–era war criminals. But otherwise, Chinese-Japanese economic relations (but not political ties) are set to get better, not worse.
The delinking limits the ways that Beijing can pressure Tokyo — or induce Japanese business to pressure Abe. In turn, it forces China to rely on policies, such as the ADIZ, that could alienate other Asian neighbors. … At the heart of China’s reversal of last year’s tactics toward Japan is the economic reality that China needs Japan just as much as Japan needs China. China’s own export sector hinges on parts coming from Japan (for example, the Toshiba flash drives used in the iPhones that are assembled in China). Already facing an economic slowdown, the country is loath to give up the jobs, investment, and technology transfers that come from Japanese firms expanding their facilities in China.

9 SeptemberFukushima’s financial fallout
As reports surrounding Japan’s nuclear disaster get steadily worse, the country is on the verge of a financial meltdown.
(Al Jazeera) The shutting down of the plant removed thousands of megawatts from the country’s power grid – but that was just the beginning of the problems caused by Fukushima’s meltdown.
Continuing fears about food safety are destroying the livelihoods of farmers and fishermen who have worked the Fukushima lands and coastline for generations, while concerns over nuclear power in general is creating a financial black hole for Japan’s government.
Before the disaster, which led to the country bringing 50 of its nuclear reactors offline due to safety concerns and mounting public pressure, the nuclear industry was providing 30 percent of Japan’s electricity.Japan Olympic win boosts Abe, but Fukushima shadows linger
(Reuters) – Japan savored its victory on Monday in the race to host the 2020 Olympic Games, anticipating an economic boost to spur its revival from two decades of stagnation and help it recover from the devastating 2011 earthquake and tsunami.
But while Prime Minister Shinzo Abe’s bold gamble to throw himself into the Tokyo bid paid off handsomely, his claims to have the problems of the crippled Fukushima nuclear reactor under control ran into fresh resistance.
The Japanese capital’s decisive win over rivals Madrid and Istanbul boosts Abe’s fortunes after he put his reputation on the line for the bid, and a brisk gain for Tokyo shares suggests a boon as well for national confidence, a key ingredient in the success so far of Abe’s aggressive pro-growth policies.
7 SeptemberJapanese bid’s passion earns Tokyo the 2020 Olympic Games
• Tokyo hopes the Games will galvanise nation after tsunami
• Host city offered ‘certainty in uncertain times’ in presentation
(The Guardian) When Tokyo first hosted the Olympics in 1964, it was seen as a coming out party for a country recovering from the ravages of war and reinventing itself as a peaceful economic powerhouse.
Those behind the successful 2020 bid hope their Games will have a similarly transformative effect on the world’s view of their city and help to galvanise a nation recovering from the trauma of the 2011 tsunami.
3 SeptemberJapan to fund giant underground ice wall around leaking Fukushima nuclear reactors
(CTV) The Japanese government announced Tuesday that it will spend $470 million on a subterranean ice wall and other steps in a desperate bid to stop leaks of radioactive water from the crippled Fukushima nuclear station after repeated failures by the plant’s operator.
The decision is widely seen as an attempt to show that the nuclear accident won’t be a safety concern just days before the International Olympic Committee chooses between Tokyo, Istanbul and Madrid as the host of the 2020 Olympics.
The Fukushima Dai-ichi plant has been leaking hundreds of tons of contaminated underground water into the sea since shortly after the 2011 earthquake and tsunami damaged the complex. Several leaks from tanks storing tainted water in recent weeks have heightened the sense of crisis that the plant’s owner, Tokyo Electric Power Co., isn’t able to contain the problem. Fukushima leaks: Japan pledges $470m for ‘ice wall’
21 August
Economist Intelligence Unit) A crunch moment for Japan’s recovery
If returning the global economy to health after the crises of the past five years depends on the political will to make tough choices, an upcoming decision on tax reform in Japan will bear close watching. The prime minister, Shinzo Abe, wants to raise the consumption tax in two stages from 5% to 10% in order to start tackling Japan’s enormous public debt. But to do so could bring economic growth to a halt. Despite the political risks for Mr Abe, my analysts and I believe that he will take the plunge and go ahead with the tax hike—if for no other reason than to vindicate his policy agenda to date.
Japan’s nuclear crisis deepens, China expresses ‘shock’
(Reuters) – Japan’s nuclear crisis escalated to its worst level since a massive earthquake and tsunami crippled the Fukushima plant more than two years ago, with the country’s nuclear watchdog saying it feared more storage tanks were leaking contaminated water.
The U.N.’s International Atomic Energy Agency (IAEA) said on Wednesday it viewed the situation at Fukushima “seriously” and was ready to help if called upon, while nearby China said it was “shocked” to hear contaminated water was still leaking from the plant, and urged Japan to provide information “in a timely, thorough and accurate way”.
20 AugustFukushima operator says workers dusted with radioactive particles
The operator of Japan’s crippled Fukushima nuclear plant said on Monday two workers were found to be contaminated with radioactive particles, the second such incident in a week involving staff outside the site’s main operations center.
5 AugustFukushima radioactive water leak an ’emergency
(BBC) Japan’s nuclear watchdog has said the crippled Fukushima nuclear plant is facing a new “emergency” caused by a build-up of radioactive groundwater.
A barrier built to contain the water has already been breached, the Nuclear Regulatory Authority warned.
This means the amount of contaminated water seeping into the Pacific Ocean could accelerate rapidly, it said.
30 JulyJapan plans to boost military capability in overhaul of pacifist defence strategy
Prime minister Shinzo Abe hints at new tactics to counter threat from North Korea and China
Japan’s defence ministry last Friday recommended significant upgrades in the country’s military capabilities, including the purchase of surveillance drones, citing increasing security tensions in the region.
The plans were outlined in an interim report about overhauls to Japan’s defence strategy. Although a final determination won’t come until the end of the year, the report hints at the nation’s new defence tactics under hawkish prime minister Shinzo Abe, who has pledged to loosen restrictions on Japan’s pacifist forces. …
According to analysts, Japan’s greatest security concern is the East China Sea, where it disputes a chain of islands with China. Since the Japanese government purchased several of the islets last year, Chinese ships have patrolled the area with increasing frequency, most recently last Friday, when coastguard vessels confronted Japanese boats. Although no such standoff has turned violent, experts in Tokyo and Washington worry that a miscalculation could trigger an armed conflict.
To respond to any attack on a remote island, the interim report said, “air superiority and command of the sea must be maintained. To rapidly deploy troops as the situation unfolds, mobile deployment capability and amphibious capability are also important.”
25 JulyCaroline Kennedy: Is she qualified to be US ambassador to Japan?
(CSM) Caroline Kennedy’s previous foray into public service, an aborted run for US Senate in New York, was awkward. But she has what any good ambassador must have: clout with the president.The Economist Chief economist writes:
Japan’s ruling coalition won a resounding victory in an election for the upper house of parliament on July 21st. The win was confirmation of public support for the policies of Shinzo Abe, the prime minister, who has focused on measures to rejuvenate the economy since guiding the Liberal Democratic Party (LDP) to a lower house victory in a general election in December 2012.
With control of both chambers, Mr Abe now has the strongest legislative mandate of any Japanese premier since 2007. While the economy will remain his main focus, in our post-election analysis we explain why, paradoxically, the win could herald a period of greater policy uncertainty. With a very weak opposition, little incentive for the LDP to enforce internal discipline and a testing diplomatic agenda, Mr Abe is increasingly likely to find his attention being pulled in several directions at once.
23 July
Joseph Caron: Abe wants to transform Japan. Canada can helpCanadians may not be help Mr. Abe fight his political battles at home, but the government of Canada can use its diplomatic assets and skills to encourage a more positive geopolitical environment in Northeast Asia, where Japanese, Chinese and Korean interests increasingly clash. The new Japanese government’s domestic policies will come to naught if the focus is on the day-to-day management of a fractious regional environment. Canada should do everything in its power to encourage regional political and security dialogues, trade and investment liberalization and the multiplication of civil society contacts.
Mr. Abe wants to transform Japan. He believes that two decades have been lost to preserving dysfunctional social and economic systems while the rest of the world has globalized. He believes that profound social change must be part of Japan’s transformation. Women must become full participants in society. Education must be internationalized, with foreign language training from grade school onward, and with universities that can compete with the world’s best. Foreign talent must be welcomed and become part of the Japanese social fabric.
The economic agenda is equally ambitious because only a truly open Japan can sustain growth. Mr. Abe wants to make starting a business easier. He wants to adjust the tax regime to encourage the broad availability of risk capital. He proposes to establish a business environment as open as that of the United States, Britain and the other leading economies. He wants to increase competition within Japan’s oligopolistic structures by liberalizing trade through agreements such as the Trans-Pacific Partnership and new bilateral agreements. And he wants to double foreign direct investment by the end of the decade.Japan’s coalition cannot rest easy
(Economist Intelligence Unit) … several pressing items will mean that Mr Abe’s focus must remain on the economy. In September the cabinet is due to announce more detailed structural reforms to complement the fiscal and monetary policy initiatives that contributed greatly to the success of Mr Abe’s first seven months in office. …
Then there is the planned rise in the consumption tax, necessary to help cut Japan’s gigantic public debt. Although the legal groundwork for a rise in the tax (in two stages, in 2014 and 2015) has already been laid, the decision over whether to proceed depends on whether the economy is robust enough to withstand such fiscal tightening. …
Finally, Mr Abe will have to continue to champion economic priorities, partly in order to maintain internal party discipline.Abe and the LDP Win Big in Legislative Elections
(Foreign Policy) Riding a wave of stimulus money to the voting urns, Japanese Prime Minister Shinzo Abe and his Liberal Democratic Party secured a majority in both of the country’s legislative houses, delivering a stamp of approval for his economic policies and possibly setting up Japan for its most significant constitutional revision since World War II.
A man with deeply nationalist roots, Abe has embarked on a twin project of national renewal, launching an aggressive stimulus program — better known as “Abenomics” and which has injected a measure of dynamism to the sluggish Japanese economy — while also floating the idea of revising the country’s pacifist constitution. Abe’s military initiative comes in response to what many in Japan see as the danger of a rising China to the country’s west and the need for Japan not just to have a self defense force but a bona fide military to counter that threat. On Monday, Abe linked those two projects. “Economics is the source of national power. Without a strong economy, we cannot have diplomatic influence or dependable social security,” he said. “I want to make Japan’s presence felt in the world.” Japan poll: PM Abe seeks stable government after winStrategic Triangle: A Japan-Australia-India Coalition at Sea?
(The Diplomat) Japan, Australia, and India lie along a vast outer maritime crescent enclosing continental East Asia. That external position, plus the long lines of communication connecting the three countries and the potentially contested terrain lying in between, would make working together a trying prospect in times of strife. A loose consortium in peacetime, and for police functions to which no one objects, fine. In competitive times, watch out.
Another thing leapt off the map while surveying the CNAS agenda, complemented by a cursory reading of history. The second panel reviewed Japanese relations with South Korea and the ASEAN countries. If the outer-crescent powers are liberal seagoing republics, the inner crescent is home to an assemblage of (mostly) continental nations. One shares a land frontier with China, another, South Korea, a border with China’s ally North Korea. And, with the exception of Thailand, the interior countries all fell to Imperial Japanese conquest within living memory. That imperial legacy hangs a millstone on contemporary Japan’s relations with Koreans and Southeast Asians.
Back to Japan, Australia, and India. Beset by distended sea lanes, convoluted geography, and the myriad other stresses the strategic setting imposes, Tokyo, Canberra, and New Delhi must attach considerable political value to combined naval and military action in order to justify the costs, hardships and political headaches such a coalition would entail. Mutual interests, and in particular mutual threats, are the most dependable adhesives that bind together alliances and coalitions. The more compelling the common interest, or the more deadly the menace, the greater the likelihood that the collaborative impulse will override the differences that work against such joint enterprises as policing the commons or facing down hostile powers.
19 JulyAbenomics: The objectives and the risks
(BBC) Shinzo Abe has a mission – that of reviving the Japanese economy, which has been stagnant for two decades.
And in his quest to do so Mr Abe, who won a return to office as Japan’s prime minister in December, has launched one of the most aggressive policy moves in Japan’s history.
Such has been the scale of his plan, that observers have even named it after him, calling it “Abenomics”.
It is based on three key pillars – the “three arrows” of monetary policy, fiscal stimulus and structural reforms – to ensure long-term sustainable growth in the world’s third-largest economy
18 JulyJapan’s Silver Democracy — The Costs of Letting the Elderly Rule Politics
(Foreign Affairs) The results of this weekend’s upper house election in Japan’s Diet will hinge on voters’ assessment of Prime Minister Shinzo Abe’s economic stimulus plan, his proposals to revise the constitution, and his relations with neighboring countries. In other words, yet another election will pass with hardly a mention of the single-most important factor for the country’s prospects: demographics.
No country is aging faster than Japan. Between 1985 and today, the percentage of the Japanese population over 65 rose from a tenth to nearly a quarter. By 2060, that figure will rise to nearly 40 percent. And by that point, Japan’s population will have shrunk from around 128 million to less than 100 million people.
29 MayIndia’s Love Affair With Japan Fueled By Disputes With China
If the enemy of my enemy is my friend, then India and Japan are partners in a great love affair. The common “enemy” — or at least a suspect viewed as a threat by both of them — is China. From opposite sides of Asia, these two huge but very different democracies share common cause in territorial disputes with China for which there seems no immediate solution.
China’s expansionist moves from East to Southeast to South Asia form the background to a visit to Japan this week by India’s Prime Minister Manmohan Singh in which he and Japan’s Prime Minister Shinzo Abe are primed to broaden security and commercial arrangements with implications for China. If they’re not forming an alliance, they’re getting about as close as they can come without signing a formal treaty.
The immediate background for why India and Japan, so different culturally and economically, get along so well with one another are scrapes with China that touch upon the deepest sensitivities and interests of both of them.

2012

hina’s rise in one generation as a global player under authoritarian rule has come to epitomise the qualitative reordering of power in Asia and the wider world. Not since Japan rose to world-power status during the reign of the Meiji emperor in the second half of the 19th century has another non-Western power emerged with such potential to alter the world order as China today. As the 2009 assessment by the US intelligence community predicted, China stands to more profoundly affect global geopolitics than any other country. China’s ascent, however, is dividing Asia, not bringing Asian states closer. A fresh reminder of that came when provocative Chinese actions prompted the new Japanese Government to reverse course on seeking a “more equal” relationship with the US and agree to keep the US military base in Okinawa island.

2 Comments on "Japan 2013 – 2014"

The Special Report in this month’s Bank Credit Analyst argues that Abenomics will ultimately succeed but that quantitative easing alone will not be enough to end deflation. The Bank of Japan will eventually need to take more extreme measures, including potentially undertaking formal debt monetization.Peter Berezin
Managing Editor, BCA Research

BCA’s Geopolitical Strategy team comments
While the outcome of the Upper House election will have little immediate bearing on
Japanese monetary policy, a robust electoral victory for the LDP will enable the Abe administration
to pursue its fiscal and structural reform agenda without interruption from the
opposition. A decisive electoral victory will also legitimize ‘Abenomics’ as a strategy, and
give Abe considerable political capital as he moves toward implementing the structural
reform component of his economic strategy; allowing politics to remain a tailwind to both
growth and markets in Japan.